Chairman's Message

Dear shareholders：

Amidst a slowdown in the global economy and
fluctuating exchange rates, consumer sentiment was low in 2015. We, however,
responded well to these constantly shifting market conditions. With concerted
efforts by our valued staff, coupled with stringent controls on costs and
expenses and an effective “Step Up” product strategy, we were able to secure
fifth position among global handset brands in 2015 with a healthy and stable
level of profitability.

Last year, from the initial establishment
of the twin strategies of “Double +” transformation and internationalisation
and continuing with their deeper implementation, we have gradually grown into a
global leader both as a smart device manufacturer and an internet application
service provider. We have now applied “Intelligence + Internet” across all our
products and have promoted the new “Product + Service” business model.

On the product front, we launched a number of
innovative smart devices which are widely recognised by the market, including
the award winning flagship smartphone alcatel
IDOL 3, and alcatel WATCH, the
world’s first smart wearable device supporting both Android and iOS operating systems.
On the mobile internet application and service side, as of 31 December 2015,
the number of cumulative activated mobile users of our mobile internet platform
had grown more than 2 times year-on-year to 23.6 million, while the number of cumulative
application downloads amounted to nearly 226.3 million. The online financial
service platform (third-party mobile payment gateway), which was jointly
developed by us and our parent company, TCL Corporation, recognised a
settlement amount of HK$3.6 billion, a year-on-year increase of almost 1.5
times. These results showed that we have achieved substantial progress in our
business transformations relating to products and user management.

We foresee that the purchasing power of the
overall market will be adversely affected by uncertainties in the global
economy and continuing economic slowdown in emerging markets in 2016.

However, we also see that it will be a year
of opportunities as well as challenges, representing a unique opportunity for
us to outpace our peers by unleashing our business potential, enhancing our
corporate competitiveness and establishing a bridgehead in a competitive
business environment.

Moving forward, we will continue to
integrate the spirit of “goals and beliefs, teamwork, execution, tenacity and
breakthrough” into our corporate culture, which will be a powerful driving
force to propel us to the next level. We will intensify our efforts towards
internationalisation and the “Double +” business transformation strategy. In our
internationalisation efforts, we will adhere to the strategy of “Focusing on
emerging markets, increasing market share in European and American markets”,
achieving a leading position in each market by adjusting our sales channels,
optimizing our product portfolio and improving our product competitiveness.

In the “Double +” business transformation,
we will transition from hardware-based to software-based business, and aim to
raise the number of cumulative activated mobile users of our mobile internet platform
and downloads per capita, as well as to increase the value and loyalty of users
by vertical industry chain integration and horizontal business expansion. At
the same time, we will be launching competitive, innovative payment products
and financial services to attract more internet-connected business users and to
achieve a sustainable income by continuing development of our service segment and
unleashing the development potential there.

In addition, we are committed to enhancing
our cloud capabilities in Big Data analysis and content distribution, to
improve our product ecosystem from the users’ point of view and further broaden
our user base.

In 2016, on top of our solid business
foundation and healthy financial position, we aim to enhance our four core
competencies, namely product technology, industry, branding and globalisation,
and internet application services. We will be actively developing user-oriented
smart devices and application services, and establishing a comprehensive,
expandable service and integrated product platform in order to grasp every
business opportunity to become a leading mobile internet enterprise.

Last but not least, on behalf of the Board
of Directors, I would like to express my sincere gratitude to our shareholders,
customers, suppliers and business partners for their unwavering support. Also,
I would like to thank the management and staff for their unstinting effort.